Back to square one after a lifetime of work

Harsh realities await many seniors who want to stay on the job after retirement

by Akemi Nakamura

With spring comes the annual wage negotiations, when unions press employers for higher pay. These days, however, an increasing number of the workers at the bargaining table are themselves in the autumn of life — 60 or older.

Not only does Senior Union Tokyo, formed last December, help its members campaign for wage increases and improvements in other working conditions, it also plans to petition the Health, Labor and Welfare Ministry on Friday for job security for older workers.

“Some senior workers who want to continue to work at their companies after retirement age complain that their wages have been cut by 30 percent to 40 percent although they do the same jobs (as before),” said Kiyotsugu Shitara, general secretary of the union. “We want to stop such unreasonable treatment in the workplace for senior employees.”

As the labor market shrinks, the government is trying to create an environment in which people can work until they turn 65. In fact, more seniors need to continue to work after formally retiring because the age they become eligible to receive pension benefits has been moving up gradually since 2001 from 60 to 65.

To address this issue, the revised Law Concerning Stabilization of Employment of Old Persons, which took effect in April 2006, obliges employers to do one of three things: abolish the retirement age, extend it to 65, or rehire workers after formal retirement up to age 65. The revision is silent on the amount of salary employers must offer the older workers they rehire.

While many companies have begun re-employing workers after retirement, some seniors complain that the law in fact fails to ensure job security and reasonable working conditions.

After formally retiring from Tokyo Cablevision, a foundation promoting the spread of cable TV, last July, Kazuko Hirakawa found that she had fallen through the cracks in the law when her company declined to re-employ her. “I was shocked because I never thought I wouldn’t be rehired,” the 60-year-old said.

Hirakawa suspects that a confrontation between her and the foundation’s management was behind the decision.

In 2005, she had filed a damages lawsuit against the foundation, claiming it has a sexually discriminatory promotion system, and on her Web blog she also wrote about a foundation executive’s comments that she regarded as sexual harassment.

“Employers can refuse to hire those employees they don’t like” regardless of their competence in the workplace, said Hirakawa, who is also a member of Senior Union Tokyo.

Criteria for re-employing seniors are agreed upon between labor — either corporate labor unions or other employee representatives — and management. Thus, if these criteria are not met, a company is not obliged to rehire a worker.

The foundation’s evaluation of Hirakawa’s performance over the previous year did not satisfy one of the four points stipulated in its criteria for its re-employment system, which was agreed upon by an employee representative in 2006, a foundation official said.

Her blog damaged the foundation’s reputation, a violation of its employment rules, and thus lowered her evaluation below the level required for re-employment, the official said.

Hirakawa is now living off her savings while petitioning the Tokyo Labor Committee to mediate her case with the foundation.

Those lucky enough to be rehired, however, may find themselves facing harsh working conditions, noted Masami Tamai, 59, another Senior Union Tokyo member who will retire from a company in Saitama Prefecture in June.

Under his company’s rules, retiring workers are rehired on a one-year contract basis, their salaries are cut by 40 percent to 70 percent and the cuts continue year after year.

The reduction is a blow to workers who still have mortgage payments or are putting their children through school, Tamai said.

“The current re-employment system can make seniors’ lives unstable,” Tamai said.

In fact, a survey conducted in October 2006 by the Japan Institute for Labor Policy and Training shows that 89.4 percent of 1,051 companies that have a postretirement re-employment system rehire seniors on a one-year or shorter contract basis.

Forty-four percent of the companies said the workers receive 60 percent to 70 percent of their previous wages, while 29.5 percent said their salaries were half or less.

Cutting the salaries of seniors may be a reasonable step for employers that want to reduce personnel expenses, said Atsuhiro Yamada, an associate professor of labor economics at Keio University in Tokyo.

“In general, their salary levels at the time of retirement are out of balance with their productivity levels,” he said. “The problem is that some employers cut senior workers’ wages too drastically. . . . By doing so, they may be trying to discourage seniors from wanting to continue to work after retirement.”

If companies rehired at the same wage level all the employees who wanted to continue to work after retiring, it would force employers to reduce the number of new graduates they hire, Yamada said.

Yamada said the problems senior workers face reflect the reality of Japan’s seniority-based employment system: There is a wide gap in wages between regular employees under the traditional lifetime employment system and those on short-term contracts.

“When senior workers begin working on a short-term contract after retirement, they may for the first time find out about the terrible working conditions for a nonregular worker,” Yamada said.

To increase job security for seniors as well as other nonregular workers, companies need to promote a productivity-based salary system, he said.

“The current re-employment system for senior workers is in a transitional stage,” Yamada said, adding that workers need to think more about working conditions for nonregular workers at their companies as well as postretirement jobs, before they retire.